DeFi Guides

Venus Protocol: Decentralized Marketplace for Lenders & Borrowers

Venus users are able to invest in their cryptocurrencies by supplying collateral which can be borrowed against. Funds held within the protocol can earn APY's based on the market demand for that asset.
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Venus Protocol (Venus) is the top money market protocol running on Binance Smart Chain (BSC) which offers a complete decentralized finance-based lending, borrowing, and credit system on digital assets.

Venus users are able to invest in their cryptocurrencies by supplying collateral which can be borrowed against. Funds held within the protocol can earn APY’s based on the market demand for that asset.

What is Venus Protocol?

Compared to other money market protocols, the collateral on Venus protocol supplied to the market is not only used for borrowing other assets but users also can use it to mint synthetic stablecoins which are backed by cryptocurrencies, not fiat currencies.

Users can directly invest their collateral at a fast speed and low cost while having access to a deep network of wrapped tokens and liquidity.

As the adoption of blockchain technology and DeFi are blooming in the finance industry, the use of cryptocurrencies has been rising. As a result, more and more people need to borrow digital assets.

What Is Venus’ Solution for the DeFi Space?

There are a lot of bottleneck limitations in the procedure for loans which they often catch in centralized exchanges. The KYC process often requires background checks on credits, and the long wait for confirmations, or even being rejected by the finance provider.

The appearance of decentralized finance in cryptocurrency is transforming the crypto field by providing transparent transactions and does not require third-party authorization.

Though DeFi has numerous benefits, there remains a problem because DeFi exchanges are built on Ethereum blockchain which has had scalability issues. In addition, these DeFi platforms not only have high transaction fees but also low rates and a poor user interface.

In order to solve these issues, Venus creates a solution into the framework of creating synthetic stablecoins.

As such, users are able to experience high-speed transfers with low transaction costs on the Binance Smart Chain. Venus users can invest in collateral, collect interest on collateral, take advantage of collateral, and mint stablecoins faster.

Venus Features

As mentioned, Venus is built on BSC, therefore, it is able to lightning-fast processes at low transaction costs.

Customers can quickly borrow cryptocurrencies and stablecoins without a credit check process. Because of its near-instant transfers, Venus is the most powerful money market protocol that allows customers to enter lending markets for cryptocurrencies and stablecoins to source liquidity in real-time.

It is one of the unstoppable markets that does not limit customers in their regional area, credit score, or anything else while they can source liquidity by posting ample collateral. Also, customers can earn a nice APY by providing liquidity to the protocol secured by over-collateralized assets.

Moreover, users are allowed to mint stablecoins from their supplied collateral on Venus protocol that can be used in over 60 million areas across the world with the Swipe platform and more.

In order to prevent market abuse assaults, Venus uses price feed oracles to provide reliable pricing details that cannot be tampered with.

In addition, the Venus Token not only powers the protocol but there’s also a governance token made for a fair launch distribution in the Venus community.

Tokenomics

Venus Token (XVS)

XVS is the native token on the Venus protocol and be used for governing the network.

The token is designed to be a “fair launch” cryptocurrency because is not pre-mined for founder, team, or developer allocations. Users can only earn the token by participating in the Binance LaunchPool project or providing liquidity to the protocol.

Venus is among the first protocols that run a Binance Launchpool to allow users to mine XVS by staking properties.

With the token, 20% of the total supply of 6,000,000 XVS is allocated to the Binance LaunchPool for users to mine with 1% of the total supply of 300,000 XVS placed aside for grants in the Binance Smart Chain ecosystem.

The remainder of supply is going to be available for the protocol. Therefore, 23,700,000 XVS are allowed to mine for four years at a rate of 0.64 XVS per block (18,493 per day) since the Binance LaunchPool event was introduced.

Meanwhile, XVS is distributed based on liquidity mining as follows:

  • Daily rewards to borrowers – 35%
  • Suppliers – 35%
  • Stablecoin minters – 30%
  • Currently, users can purchase XVS on Binance, Bithumb, Gate.io, KuCoin, PancakeSwap, among others.

vTokens

vTokens are the pegged assets, which are created by Venus when a user performs a transaction with the protocol and supplies collateral. vTokens not only represent the unit of the collateral supplied but also are used as a redemption tool.

vTokens are created and implemented by Governance processes as well as being voted by XVS holders.

Community Governance

The Venus protocol is developed to give the community controls, therefore, pre-mines are not available for the team, developers, or even founders. The protocol is controlled by those who mine Venus Tokens.

An entity will need 300,000 XVS to create a proposal and the proposal has to receive at least 600,000 XVS votes to be approved.

Governance features include the possibility to add new cryptocurrencies or stablecoins to the protocol.

Also the community can adjust variable interest rates for all markets, set fixed interest rates for synthetic stablecoins, vote on protocol proposals, and delegate protocol reserve distribution schedules.

Safety and Venus Protocol

The protocol is protected by the Binance Smart Chain which is compliant with the Ethereum Virtual Machine (EVM). The technology will keep operating even though the Binance Chain goes down or faces problems.

Binance Smart Chain uses an exclusive algorithm known as the proof-of-staked authority (POSA) in order to secure the protocol. The algorithm is a composite consensus process that combines elements of both proof-of-stake (POS) and proof-of-authority (POA).

In addition, there’re automatic liquidation measures that will secure suppliers on Venus by immediately liquidating creditors’ collateral if it slips below 75% of their lent value.

As a result, collateral can be reimbursed to suppliers as soon as possible to ensure the minimum collateralization level.

Venus Protocol is Expanding the Binance Ecosystem

With the explosion of DeFi, a lot of lending protocols appeared to make markets for thousands of emerging token assets.

Venus is different from other competitors in the market such as Aave, Compound, or MakerDAO because it is the one-stop protocol for DeFi unifying the best of the ecosystem including maximizing capital efficiency and user experience ranging from lend and borrow to yield farming and swap.

With the vision to provide users a more secure and healthy marketplace, BSC-built Venus is able to solve some existing challenges associated with the Ethereum blockchain, which jeopardized users’ protection and welfare by the volatile business dynamics.

Venus has been developing a dependable and reasonably simple platform for users in the DeFi finance world where they could conduct practices such as aggregated lending, earning interest, and reliable mining in a secured way.

The protocol allows borrowers to get instant loans in stablecoins after their cryptocurrency holdings, creating more access to capital without selling their non-stablecoin digital assets.

Meanwhile, lenders can deposit stablecoins or cryptocurrencies on the platform to achieve a passive income.

Currently, Venus Protocol places the #1 lender on BSC protocol as well as top 5 in the whole of crypto.

It is now among the several protocols that aim to solve the Defi challenges, but whether the coming V2 would remain ahead of the competition and goes so far in DeFi 2.0.

To learn more about Venus Protocol, please click right here!




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Nicholas Say was born in Ann Arbor, Michigan. He has traveled extensively, lived in Uruguay for many years, and currently resides in the Far East. His writing can be found all over the web, with special emphasis placed on realistic development, and the next generation of human technology.

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